FTSE 100 forecast: Oil giants rise following Saudi Arabia output cut

FTSE 100 hits week-high

The FTSE 100 is trading 0.4% higher this morning, with the blue-chip index starting the new week at June-highs and on course to gain ground for a fourth consecutive session.

That follows on from a positive session in Asia, where markets caught up with the jump seen in the US on Friday following non-farm payrolls coming in much stronger than anticipated.

In terms of economic events today, we have PMI data out from the UK, Spain, Italy, France and Germany. We will also have PMIs and PPI data out from the euro area. The president of the European Central Bank, Christine Lagarde, will also be giving a speech that markets will be watching for clues on the future path of interest rates. US PMIs will follow this afternoon, along with factory and durable goods orders.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the performance of the FTSE 100, has hit a one-week high and surpassed the 7,622 ceiling that has been in play on several occasions since early 2022. Sustaining a move above here would allow it to target the 7,110 level of support that held firm for most of May (with a potential mid-level rise to 7,660 worth watching).

A move back below the 7,622 level would bring the June-trough of 7,452 back into play, which must hold to avoid bringing the 2023-lows onto the radar.

Top UK stock news

Keep an eye on oil giants BP and Shell, up 2.8% and 1.8% respectively, as well as other producers after oil prices rose more than 1% on Monday, driven by news that Saudi Arabia plans to cut its output by 1 million barrels per day in an effort to support prices.

Diageo is up 0.8% after appointing Debra Crew as interim chief executive with immediate effect, allowing her to effectively take over at the helm ahead of her formal appointment at the start of July. The alcoholic drinks giant said this was a decision made in response to current CEO Ivan Menezes suffering a setback during his treatment for medical conditions, including an ulcer.

International Consolidated Airlines Group is down 0.4% this morning. CEO Luis Gallego said he expects this summer to be better for airlines compared to last year as the recovery from the pandemic continues, although warned that challenges remain. Speaking to Bloomberg TV, the CEO said demand for air travel is ‘super strong’ for the second and third quarters, with premium leisure travel countering weakness in corporate travel. However, problems with air traffic control and strike action in France pose a risk.

AstraZeneca is down 0.4% after it said late on Friday that it received positive results from its Phase III trial of Imfinzi. The interim analysis said that Imfinzi plus chemotherapy ‘significantly improved’ pathologic complete response in patients with gastric and gastroesophageal junction cancers. The trial continues. Bloomberg reported that its lung cancer drug Tagrisso has also shown the ability to improve survival by more than half in a subset of patients.

UK banks continues to close branches. Barclays has announced it is closing 10 more stores on top of the 70 closures announced earlier this year. Meanwhile, Lloyds is shuttering 21 Lloyds Bank sites, 15 Halifax outlets and 17 Bank of Scotland branches between September and May 2024 following the decision to close 40 branches back in January.

Energy services group Hunting is up 1.4% after signing a 10-year strategic alliance with Zhejiang Jiuli Hi-Tech Metals Co. The deal will see the Chinese firm supply corrosion resistant alloys that will be used in Hunting’s oil tubular goods, carbon capture, utilization and storage (CCUS), and geothermal applications. The firm said CCUS and geothermal are two end markets where it is trying to become a key supplier.

Inchcape is up 0.4% after it priced its £350 million bond offering over the weekend. The bonds will be sold at a 6.5% coupon and mature in June 2028. The car dealership said the proceeds will be used to repay its existing bridge facility that is due to mature at the end of the year and was used to help fund the acquisition of Derco earlier this year.

Polymetal is down 4.8% in early trade after revealing CEO Vitaly Nesis and CFO Maxim Nazimok have both resigned as it outlined plans to ring-fence its Russian subsidiaries from its other operations in Kazakhstan as it tries to navigate the difficult geopolitical situation stemming from Russia’s invasion of Ukraine. It is also looking to re-domicile the business. Polymetal is considering ‘all options’ when it comes to its Russian assets.

Dowlais Group is up 3.3% at 129.5p after being rated as Buy by Jefferies, which set a price target of 155p and cheered its best-in-class profitability that offers investors a play to benefit from the recovery in the automotive market. Analyst Vanessa Jefferiess said Dowlais has a path to improve margins and is set up for long-term structural growth.

AVIVA has been downgraded to Neutral from Outperform by Mediobanca SpA, which has a price target of 471p on the insurer. The stock is down 0.5% at 407p today.

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